COG » Topics » Stock Options

This excerpt taken from the COG DEF 14A filed Mar 24, 2009.

Stock Options

The 2004 Plan provides for the granting to employees of incentive stock options, which are intended to comply with Section 422 of the Internal Revenue Code, and non-qualified stock options.

A stock option is a right to purchase a specified number of shares of Common Stock at a specified grant price. All stock options granted under the 2004 Plan must have an exercise price per share that is not less than the fair market value (as defined in the 2004 Plan) of the Common Stock on the date of grant (and must also be greater than the par value of the Common Stock). All stock options granted under the 2004 Plan must have a term of no more than ten years. The grant price, number of shares, terms and conditions of exercise, whether a stock option is intended to qualify as an incentive stock option under the Internal Revenue Code, and other terms of a stock option grant will be fixed by the Compensation Committee as of the grant date. However, stock options may not include provisions that “reload” the option upon exercise, and, without stockholder approval, stock options may not be repriced, including by means of a substitute award.

 

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The exercise price of any stock option must be paid in full at or before the time the stock is delivered to the optionee. The price must be paid in cash or, if permitted by the Compensation Committee and elected by the participant, by means of tendering (either by actual delivery or by attestation) previously owned shares of Common Stock or shares issued pursuant to an award under the 2004 Plan.

This excerpt taken from the COG 10-Q filed Jul 30, 2008.

Stock Options

Stock option awards are granted with an exercise price equal to the fair market price (defined as the average of the high and low trading prices of the Company’s stock at the date of grant) of the Company’s stock on the date of grant. The grant date fair value of a stock option is calculated by using a Black-Scholes model. Compensation cost is recorded based on a graded-vesting schedule as the options vest over a service period of three years, with one-third of the award becoming exercisable each year on the anniversary date of the grant. Stock options have a maximum contractual term of five years. No forfeiture rate is assumed for stock options granted to directors due to the forfeiture rate history for these types of awards for this group of individuals.

 

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Index to Financial Statements

During the first six months of 2008 and 2007, there were no stock options granted. Compensation expense recorded during the first six months of 2008 and 2007 for amortization of stock options was less than $0.1 million and $0.1 million, respectively.

This excerpt taken from the COG 10-Q filed May 5, 2008.

Stock Options

Stock option awards are granted with an exercise price equal to the fair market price (defined as the average of the high and low trading prices of the Company’s stock at the date of grant) of the Company’s stock on the date of grant. The grant date fair value of a stock option is calculated by using a Black-Scholes model. Compensation cost is recorded based on a graded-vesting schedule as the options vest over a service period of three years, with one-third of the award becoming exercisable each year on the anniversary date of the grant. Stock options have a maximum contractual term of five years. No forfeiture rate is assumed for stock options granted to directors due to the forfeiture rate history for these types of awards for this group of individuals.

During the first three months of 2008 and 2007, there were no stock options granted. Compensation expense recorded during the first three months of 2008 and 2007 for amortization of stock options was less than $0.1 million and $0.1 million, respectively.

 

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This excerpt taken from the COG 10-Q filed Oct 29, 2007.

Stock Options

Stock option awards are granted with an exercise price equal to the fair market price (defined as the average of the high and low trading prices of the Company’s stock at the date of grant) of the Company’s stock at the date of grant. The grant date fair value of a stock option is calculated by using a Black-Scholes model. Compensation cost is recorded based on a graded-vesting schedule as the options vest over a service period of three years, with one-third of the award becoming exercisable each year on the anniversary date of the grant.

 

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Index to Financial Statements

Stock options have a maximum contractual term of five years. No forfeiture rate is assumed for stock options granted to directors due to the forfeiture rate history for these types of awards for this group of individuals.

During the first nine months of 2007, there were no stock options granted. Compensation expense recorded during the first nine months of 2007 and 2006 for amortization of stock options was $0.1 million and $0.2 million, respectively.

This excerpt taken from the COG 10-Q filed Jul 30, 2007.

Stock Options

Stock option awards are granted with an exercise price equal to the fair market price (defined as the average of the high and low trading prices of the Company’s stock at the date of grant) of the Company’s stock at the date of grant. The grant date fair value of a stock option is calculated by using a Black-Scholes model. Compensation cost is recorded based on a graded-vesting schedule as the options vest over a service period of three years, with one-third of the award becoming exercisable each year on the anniversary date of the grant. Stock options have a maximum contractual term of five years. No forfeiture rate is assumed for stock options granted to directors due to the forfeiture rate history for these types of awards for this group of individuals.

 

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Index to Financial Statements

During the first half of 2007, there were no stock options granted. Compensation expense recorded during the first six months of 2007 and 2006 for amortization of stock options was $0.1 million for each period.

This excerpt taken from the COG 10-Q filed May 2, 2007.

Stock Options

Option awards are granted with an exercise price equal to the fair market price (defined as the average of the high and low trading prices of the Company’s stock at the date of grant) of the Company’s stock at the date of grant. The grant date fair value of a stock option is calculated by using a Black-Scholes model. Compensation cost is recorded based on a graded-vesting schedule as the options vest over a service period of three years, with one-third of the award becoming exercisable each year on the anniversary date of the grant. Stock options have a maximum contractual term of five years. No forfeiture rate is assumed for stock options

 

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granted to directors due to the forfeiture rate history for these types of awards for this group of individuals. During the first quarter of 2007, there were no stock options granted.

Compensation expense recorded during the first three months of 2007 and 2006 for amortization of stock options was $0.1 million for each period.

This excerpt taken from the COG 10-Q filed Oct 27, 2006.

Stock Options

During the first nine months of 2006, 30,000 stock options were granted to two incoming non-employee directors of the Company. All of these stock options were granted in the first quarter of 2006. The grant date fair value of a stock option is calculated by using a Black-Scholes model. Compensation cost is recorded based on a graded-vesting schedule as the options vest over a service period of three years, with one-third of the award becoming exercisable each year on the anniversary date of the grant. Stock options have a maximum contractual term of five years. No forfeiture rate is assumed for stock options granted to directors due to the forfeiture rate history for these types of awards for this group of individuals. Option awards are generally granted with an exercise price equal to the fair market price of the Company’s stock at the date of grant. No stock options were granted in the first nine months of 2005.

Compensation expense recorded during the first nine months of 2006 for these stock options is $0.2 million. Since the Company had not yet adopted SFAS No. 123(R) in the first nine months of 2005, stock options were not expensed through the statement of operations during 2005 and no compensation expense was recorded. Unamortized expense as of September 30, 2006 for all outstanding stock options is $0.3 million. The weighted average period over which this compensation will be recognized is approximately 2.4 years.

The assumptions used in the Black-Scholes fair value calculation for stock options are as follows:

 

     Three and Nine Months Ended
September 30, 2006
 

Weighted Average Value per Option Granted During the Period (1) 

   $ 14.65  

Assumptions

  

Stock Price Volatility

     31.5 %

Risk Free Rate of Return

     4.6 %

Expected Dividend

     0.3 %

Expected Term (in years)

     4.0  

(1) Calculated using the Black-Scholes fair value based method.

The following table is a summary of activity of stock options for the nine months ended September 30, 2006:

 

Stock Options

   Shares     Weighted-
Average
Exercise Price
   Weighted-
Average
Remaining
Contractual
Term (in
years)
   Aggregate
Intrinsic Value
(in thousands) (1)

Outstanding at December 31, 2005

   913,348     $ 15.32      

Granted

   30,000       47.60      

Exercised

   (237,273 )     15.19      

Forfeited or Expired

   (900 )     18.20      
              

Outstanding at September 30, 2006

   705,175     $ 16.74    1.3    $ 21,996
                        

Options Exercisable at September 30, 2006

   675,175     $ 15.37    1.1    $ 21,986
                        

(1) The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.

 

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At September 30, 2006, the exercise price range for outstanding options is $12.84 to $47.60 per share. The following tables provide more information about the options by exercise price.

Options with exercise prices between $12.84 and $15.00 per share:

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